Sun v CA G.R. No.

92383 July 17, 1992

J. Cruz

Facts:
Lim accidentally killed himself with his gun after removing the magazine, showing off,
pointing the gun at his secretary, and pointing the gun at his temple. The widow, the
beneficiary, sued the petitioner and won 200,000 as indemnity with additional amounts
for other damages and attorneys fees. This was sustained in the Court of Appeals then
sent to the Supreme court by the insurance company.

Issue:
1. Was Lims widow eligible to receive the benefits?
2. Were the other damages valid?

Held:
1. Yes 2. No
Ratio: 1. There was an accident.
De la Cruz v. Capital Insurance says that "there is no accident when a deliberate act is
performed unless some additional, unexpected, independent and unforeseen happening
occurs which produces or brings about their injury or death." This was true when
he fired the gun.
Under the insurance contract, the company wasnt liable for bodily injury caused by
attempted suicide or by one needlessly exposing himself to danger except to save
anothers life.
Lim wasnt thought to needlessly expose himself to danger due to the witness testimony
that he took steps to ensure that the gun wasnt loaded. He even assured his secretary
that the gun was loaded.
There is nothing in the policy that relieves the insurer of the responsibility to pay
the indemnity agreed upon if the insured is shown to have contributed to his own
accident.
2. In order that a person may be made liable to the payment of moral damages, the law
requires that his act be wrongful. The adverse result of an action does not per se make
the act wrongful and subject the act or to the payment of moral damages. The law could
not have meant to impose a penalty on the right to litigate; such right is so precious that
moral damages may not be charged on those who may exercise it erroneously. For
these the law taxes costs.
If a party wins, he cannot, as a rule, recover attorney's fees and litigation expenses,
since it is not the fact of winning alone that entitles him to recover such damages of the
exceptional circumstances enumerated in Art. 2208. Otherwise, every time a defendant
wins, automatically the plaintiff must pay attorney's fees thereby putting a premium on
the right to litigate which should not be so. For those expenses, the law deems the
award of costs as sufficient.
Philamcare v CA G.R. No. 125678. March 18, 2002
J. Ynares-Santiago

Facts:
Ernani Trinos applied for a health care coverage with Philam. He answered no to a
question asking if he or his family members were treated to heart trouble, asthma,
diabetes, etc.
The application was approved for 1 year. He was also given hospitalization benefits and
out-patient benefits. After the period expired, he was given an expanded coverage for
Php 75,000. During the period, he suffered from heart attack and was confined at MMC.
The wife tried to claim the benefits but the petitioner denied it saying that he concealed
his medical history by answering no to the aforementioned question. She had to pay for
the hospital bills amounting to 76,000. Her husband subsequently passed away. She
filed a case in the trial court for the collection of the amount plus damages. She was
awarded 76,000 for the bills and 40,000 for damages. The CA affirmed but deleted
awards for damages. Hence, this appeal.

Issue: WON a health care agreement is not an insurance contract; hence the
incontestability clause under the Insurance Code does not apply.

Held: No. Petition dismissed.

Ratio:
Petitioner claimed that it granted benefits only when the insured is alive during the one-
year duration. It contended that there was no indemnification unlike in insurance
contracts. It supported this claim by saying that it is a health maintenance organization
covered by the DOH and not the Insurance Commission. Lastly, it claimed that the
Incontestability clause didnt apply because two-year and not one-year effectivity
periods were required.
Section 2 (1) of the Insurance Code defines a contract of insurance as an agreement
whereby one undertakes for a consideration to indemnify another against loss, damage
or liability arising from an unknown or contingent event.
Section 3 states: every person has an insurable interest in the life and health:
(1) of himself, of his spouse and of his children.
In this case, the husbands health was the insurable interest. The health care agreement
was in the nature of non-life insurance, which is primarily a contract of indemnity. The
provider must pay for the medical expenses resulting from sickness or injury.
While petitioner contended that the husband concealed materialfact of his sickness, the
contract stated that:
that any physician is, by these presents, expressly authorized to disclose or give
testimony at anytime relative to any information acquired by him in his professional
capacity upon any question affecting the eligibility for health care coverage of the
Proposed Members.
This meant that the petitioners required him to sign authorization to furnish reports
about his medical condition. The contract also authorized Philam to inquire directly to
his medical history.
Hence, the contention of concealment isnt valid.
They cant also invoke the Invalidation of agreement clause where failure of the
insured to disclose information was a grounds for revocation simply because the answer
assailed by the company was the heart condition question based on the insureds
opinion. He wasnt a medical doctor, so he cant accurately gauge his condition.
Henrick v Fire- in such case the insurer is not justified in relying upon such statement,
but is obligated to make furtherinquiry.
Fraudulent intent must be proven to rescind the contract. This was incumbent upon the
provider.
Having assumed a responsibility under the agreement, petitioner is bound to answer
the same to the extent agreed upon. In the end, the liability of the health care
provider attaches once the member is hospitalized for the disease or injury covered by
the agreement or whenever he avails of the covered benefits which he has prepaid.
Section 27 of the Insurance Code- a concealment entitles the injured party to rescind a
contract of insurance.
As to cancellation procedure- Cancellation requires certain conditions:
1. Prior notice of cancellation to insured;
2. Notice must be based on the occurrence after effective date of the policy of one
or more of the grounds mentioned;
3. Must be in writing, mailed or delivered to the insured at the address shown in the
policy;
4. Must state the grounds relied upon provided in Section 64 of the Insurance Code
and upon request of insured, to furnish facts on which cancellation is based
None were fulfilled by the provider.
As to incontestability- The trial court said that under the title Claim procedures of
expenses, the defendant Philamcare Health Systems Inc. had twelve months from the
date of issuance of the Agreement within which to contest themembership of the patient
if he had previous ailment of asthma, and six months from the issuance of the
agreement if the patient was sick of diabetes or hypertension. The periods having
expired, the defense of concealment or

American Home v Chua G.R. No. 130421. June 28, 1999

C.J. Davide

Facts:
Chua obtained from American Home a fire insurance covering the stock-in-trade of his
business. The insurance was due to expire on March 25, 1990.
On April 5, 1990, Chua issued a check for P2,983.50 to American Homes agent, James
Uy, as payment for the renewal of the policy. The official receipt was issued on April 10.
In turn, the latter a renewal certificate. A new insurance policy was issued where
petitioner undertook to indemnify respondent for any damage or loss arising from fire up
to P200,000 March 20, 1990 to March 25, 1991.
On April 6, 1990, the business was completely razed by fire. Total loss was estimated
between P4,000,000 and P5,000,000. Respondent filed an insurance claim with
petitioner and four other co-insurers, namely, Pioneer Insurance, Prudential Guarantee,
Filipino Merchants and Domestic Insurance. Petitioner refused to honor
the claim hence, the respondent filed an action in the trial court.
American Home claimed there was no existing contract because respondent did not pay
the premium. Even with a contract, they contended that he was ineligible bacue of his
fraudulent tax returns, his failure to establish the actual loss and his failure to notify to
petitioner of any insurance already effected. The trial court ruled in favor of respondent
because the respondent paid by way of check a day before the fire occurred and that
the other insurance companies promptly paid the claims. American homes was made to
pay 750,000 in damages.
The Court of Appeals found that respondents claim was substantially proved and
petitioners unjustified refusal to pay theclaim entitled respondent to the award of
damages.
American Home filed the petition reiterating its stand that there was no existing
insurance contract between the parties. It invoked Section 77 of the Insurance Code,
which provides that no policy or contract of insurance issued by an insurance company
is valid and binding unless and until the premium thereof has been paid and the case
of Arce v. Capital Insurance that until the premium is paid there is no insurance.

Issues:
1. Whether there was a valid payment of premium, considering that respondents check
was cashed after the occurrence of the fire
2. Whether respondent violated the policy by his submission of fraudulent documents
and non-disclosure of the other existing insurance contracts
3. Whether respondent is entitled to the award of damages.

Held: Yes. No. Yes, but not all damages valid. Petition granted. Damages modified.

Ratio:
1. The trial court found, as affirmed by the Court of Appeals, that there was a valid
check payment by respondent to petitioner. The court respected this.
The renewal certificate issued to respondent contained the acknowledgment that
premium had been paid.
In the instant case, the best evidence of such authority is the fact that petitioner
accepted the check and issued the officialreceipt for the payment. It is, as well, bound
by its agents acknowledgment of receipt of payment.
Section 78 of the Insurance Code explicitly provides:
An acknowledgment in a policy or contract of insurance of the receipt of premium is
conclusive evidence of its payment, so far as to make the policy binding,
notwithstanding any stipulation therein that it shall not be binding until the premium is
actually paid.
2. Submission of the alleged fraudulent documents pertained to respondents income
tax returns for 1987 to 1989. Respondent, however, presented a BIR certification that
he had paid the proper taxes for the said years. Since this is a question of fact, the
finding is conclusive.
Ordinarily, where the insurance policy specifies as a condition the disclosure of existing
co-insurers, non-disclosure is a violation that entitles the insurer to avoid the policy. The
purpose for the inclusion of this clause is to prevent an increase in the moral hazard.
The relevant provision is Section 75, which provides that:
A policy may declare that a violation of specified provisions thereof shall avoid it,
otherwise the breach of an immaterial provision does not avoid the policy.
Respondent acquired several co-insurers and he failed to disclose this information to
petitioner. Nonetheless, petitioner is estopped from invoking this argument due to the
loss adjusters admission of previous knowledge of the co-insurers.
It cannot be said that petitioner was deceived by respondent by the latters non-
disclosure of the other insurance contracts when petitioner actually
had prior knowledge thereof. The loss adjuster, being an employee of petitioner, is
deemed a representative of the latter whose awareness of the other insurance contracts
binds petitioner.
3. Petitioner is liable to pay the loss. But there is merit in petitioners grievance against
the damages and attorneys fees awarded. There was no basis for an award for loss of
profit. This cannot be shouldered by petitioner whose obligation is limited to the object
of insurance.
There was no fraud to justify moral damages. Exemplary damages cant be awarded
because the defendant never acted in a reckless manner to claim insurance. Attorneys
fees cant be recovered as part of damages because no premium should be placed on
the right to litigate.

38 Phil. 464 Mercantile Law Insurance Law Representation Warranty

In February 1916, Mrs. Harding applied for car insurance for a Studebaker she received
as a gift from her husband. She was assisted by Smith, Bell, and Co. which was the
duly authorized representative (insurance agent) of Commercial Union Assurance
Company in the Philippines. The cars value was estimated with the help of an
experienced mechanic (Mr. Server) of the Luneta Garage. The car was bought by Mr.
Harding for P2,800.00. The mechanic, considering some repairs done, estimated the
value to be at P3,000.00. This estimated value was the value disclosed by Mrs. Harding
to Smith, Bell, and Co. She also disclosed that the value was an estimate made by
Luneta Garage (which also acts as an agent for Smith, Bell, and Co).

In March 1916, a fire destroyed the Studebaker. Mrs. Harding filed an insurance claim
but Commercial Union denied it as it insisted that the representations and averments
made as to the cost of the car were false; and that said statement was a warranty.
Commercial Union also stated that the car does not belong to Mrs. Harding because
such a gift [from her husband] is void under the Civil Code.

ISSUE: Whether or not Mrs. Harding is entitled to the insurance claim.

HELD: Yes. Commercial Union is not the proper party to attack the validity of the gift
made by Mr. Harding to his wife.

The statement made by Mrs. Harding as to the cost of the car is not a warranty. The
evidence does not prove that the statement is false. In fact, the evidence shows that the
cost of the car is more than the price of the insurance. The car was bought for
P2,800.00 and then thereafter, Luneta Garage made some repairs and body paints
which amounted to P900.00. Mr. Server attested that the car is as good as new at the
time the insurance was effected.

Commercial Union, upon the information given by Mrs. Harding, and after an inspection
of the automobile by its examiner, having agreed that it was worth P3,000, is bound by
this valuation in the absence of fraud on the part of the insured. All statements of value
are, of necessity, to a large extent matters of opinion, and it would be outrageous to
hold that the validity of all valued policies must depend upon the absolute correctness of
such estimated value.

Philam v Pineda G.R. No. L-54216 July 19, 1989

J. Paras

Facts:
Pineda procured an ordinary life insurance policy from the petitioner company
and designated his wife and children as irrevocable beneficiaries.
He then filed a petition to amend the designation of the beneficiaries in his life policy
from irrevocable to revocable.
The judge granted the request.
Petitioner promptly filed a motion but was denied. Hence, this petition.

Issues:
1. WON the designation of the irrevocable beneficiaries could be changed or amended
without the consent of all the irrevocable beneficiaries.
2. WON the irrevocable minor beneficiaries could give consent to the change
in designation

Held: No to both. Petition dismissed.

Ratio:
Under the Insurance Act, the beneficiary designated in a life insurance contract cannot
be changed without the consent of the beneficiary because he has a vested interest in
the policy.
There was an express stipulation to this effect: It is hereby understood and agreed that,
notwithstanding the provisions of this policy to the contrary, inasmuch as
the designation of the primary/contingent beneficiary/beneficiaries in this Policy has
been made without reserving the right to change said beneficiary/ beneficiaries,
such designation may not be surrendered to the Company, released or assigned; and
no right or privilege under the Policy may be exercised, or agreement made with the
Company to any change in or amendment to the Policy, without the consent of the said
beneficiary/beneficiaries.
The alleged acquiescence of the six (6) children beneficiaries of the policy cannot be
considered an effective ratification due to the fact that they were minors. Neither could
they act through their father insured since their interests are quitedivergent from one
another.
Therefore, the parent-insured cannot exercise rights and/or privileges pertaining to the
insurance contract, for otherwise, the vested rights of the
irrevocable beneficiaries would be rendered inconsequential.
Of equal importance is the well-settled rule that the contract between the parties is the
law binding on both of them and for so many times, this court has consistently issued
pronouncements upholding the validity and effectivity of contracts. Likewise, contracts
which are the private laws of the contracting parties should be fulfilled according to the
literal sense of their stipulations, for contracts are obligatory, no matter in what form they
may be, whenever the essential requisites for their validity are present
The change in the designation of was not within the contemplation of the parties. The
lower court instead made a new contract for them. It acted in excess of its authority
when it did so.

Great Pacific v CA G.R. No. 113899. October 13, 1999

J. Quisimbing

Facts:
A contract of group life insurance was executed between petitioner Great Pacific and
Development Bank Grepalife agreed to insure the lives of eligible housing loan
mortgagors of DBP.
Wilfredo Leuterio, a physician and a housing debtor of DBP, applied for membership in
the group life insurance plan. In anapplication form, Dr. Leuterio answered questions
concerning his health condition as follows:
7. Have you ever had, or consulted, a physician for a heart condition, high blood
pressure, cancer, diabetes, lung, kidney or stomach disorder or any other physical
impairment?
8. Are you now, to the best of your knowledge, in good health?
Grepalife issued a coverage to the value of P86,200.00 pesos.
Dr. Leuterio died due to massive cerebral hemorrhage. DBP submitted a
death claim to Grepalife. Grepalife denied theclaim alleging that Dr. Leuterio was not
physically healthy when he applied for an insurance coverage. Grepalife insisted that
Dr. Leuterio did not disclose he had been suffering from hypertension, which caused his
death. Allegedly, such non-disclosure constituted concealment that justified the denial
of the claim.
The widow, respondent Medarda V. Leuterio, filed against Grepalife.
The trial court rendered a decision in favor of respondent widow and against Grepalife.
The Court of Appeals sustained the trial courts decision.

Issues:
1. Whether the Court of Appeals erred in holding petitioner liable to DBP as beneficiary
in a group life insurance contract from a complaint filed by the widow of the
decedent/mortgagor?
2. Whether the Court of Appeals erred in not finding that Dr. Leuterio concealed that he
had hypertension, which would vitiate the insurance contract?
3. Whether the Court of Appeals erred in holding Grepalife liable in the amount of eighty
six thousand, two hundred (P86,200.00) pesos without proof of the actual outstanding
mortgage payable by the mortgagor to DBP.

Held: No to all three. Petition dismissed.

Ratio:
1. Petitioner alleges that the complaint was instituted by the widow of Dr. Leuterio, not
the real party in interest, hence the trial court acquired no jurisdiction over the case. It
argues that when the Court of Appeals affirmed the trial courts judgment, Grepalife was
held liable to pay the proceeds of insurance contract in favor of DBP, the indispensable
party who was not joined in the suit.
The insured private respondent did not cede to the mortgagee all his rights or interests
in the insurance, the policy stating that: In the event of the debtors death before his
indebtedness with the Creditor [DBP] shall have been fully paid, an amount to pay the
outstanding indebtedness shall first be paid to the creditor and the balance of sum
assured, if there is any, shall then be paid to the beneficiary/ies designated by the
debtor. When DBPs claim was denied, it collected the debt from the mortgagor and
took the necessary action of foreclosure on the residential lot of private respondent.
Gonzales vs. Yek Tong Lin- Insured, being the person with whom the contract was
made, is primarily the proper person to bring suit thereon. Insured may thus sue,
although the policy is taken wholly or in part for the benefit of another person named or
unnamed, and although it is expressly made payable to another as his interest may
appear or otherwise. Although a policy issued to a mortgagor is taken out for the benefit
of the mortgagee and is made payable to him, yet the mortgagor may sue thereon in his
own name, especially where the mortgagees interest is less than the full amount
recoverable under the policy. Insured may be regarded as the real party in interest,
although he has assigned the policy for the purpose of collection, or has assigned as
collateral security any judgment he may obtain.
And since a policy of insurance upon life or health may pass by transfer, will or
succession to any person, whether he has an insurable interest or not, and such person
may recover it whatever the insured might have recovered,[14] the widow of the
decedent Dr. Leuterio may file the suit against the insurer, Grepalife.
2. The medical findings were not conclusive because Dr. Mejia did not conduct an
autopsy on the body of the decedent. The medical certificate stated that hypertension
was the possible cause of death. Hence, the statement of the physician was properly
considered by the trial court as hearsay.
Contrary to appellants allegations, there was no sufficient proof that the insured had
suffered from hypertension. Aside from the statement of the insureds widow who was
not even sure if the medicines taken by Dr. Leuterio were for hypertension, the appellant
had not proven nor produced any witness who could attest to Dr. Leuterios medical
history.
Appellant insurance company had failed to establish that there was concealment made
by the insured, hence, it cannot refuse payment of the claim.
The fraudulent intent on the part of the insured must be established to entitle the insurer
to rescind the contract. Misrepresentation as a defense of the insurer to avoid liability is
an affirmative defense and the duty to establish such defense by satisfactory and
convincing evidence rests upon the insurer.
3. A life insurance policy is a valued policy. Unless the interest of a person insured is
susceptible of exact pecuniary measurement, the measure of indemnity under a policy
of insurance upon life or health is the sum fixed in the policy. The mortgagor paid the
premium according to the coverage of his insurance.
In the event of the debtors death before his indebtedness with the creditor shall have
been fully paid, an amount to pay the outstanding indebtedness shall first be paid to the
creditor.
DBP foreclosed one of the deceased persons lots to satisfy the mortgage. Hence, the
insurance proceeds shall inure to the benefit of the heirs of the deceased person or
his beneficiaries.

Sun Life v Ingersoll G.R. No. 16475 November 8, 1921

J. Street

Facts:
Sun Life issued a policy on Dy Pocos life for US$12,500. The contract stipulated that it
would be payable to the said assured or his assigns on the 21st day of February, 1938,
and if he should die before that date, then it would be given to his legal representatives.
The payment of a stipulated annual premium during the period of the policy, or until the
premiums had been completely paid for twenty years,
Dy Poco, was adjudged an insolvent by the trial court and Frank B. Ingersoll was
appointed assignee of his estate. Poco died, and Tan Sit, was appointed as the
administratrix of his intestate estate.
Both Ingersoll, as assignee, and Tan Sit, as administratix of Dy Poco's estate, asserted
claims to the proceeds of the policy. The lower court found that Ingersoll had a better
right and ordered Sun Life to pay.
The polic stipulated that after the payment of three full premiums, the assured could
surrender the policy to the company for a "cash surrender value." Butno more than two
premiums had been paid upon the policy up to the time of the death of the assured.
Hence this provision had not become effective. It must therefore be accepted that this
policy had no cash surrender value, at the time of the assured's death, either by
contract or by convention practice of the company in such cases.

Issue:
WON Ingersoll, as assignee, has a right to the proceeds of the insurance
Held: No. Sunlife must pay to the administratrix.

Ratio:
The property and interests of the insolvent which become vested in the assignee of the
insolvent are specified in section 32 of the Insolvency Law.
Sec 32 declares that the assignment to be made by the clerk of the court "shall operate
to vest in the assignee all of the estate of the insolvent debtor not exempt by law
from execution."
Moreover, by section 24, the court is required, upon making an order adjudicating any
person insolvent, to stay any civil proceedings pending against him; and it is declared in
section 60 that no creditor whose debt is provable under the Act shall be allowed, after
the commencement of proceedings in insolvency, to prosecute to final judgment any
action therefor against the debtor. In connection with the foregoing may be mentioned
subsections 1 and 2 of section 36, as well as the opening words of section 33, to the
effect that the assignee shall have the right and power to recover and to take into his
possession, all of the estate, assets, and claims belonging to the insolvent, except such
as are exempt by law fromexecution.
These provisions clearly evince an intention to vest in the assignee, for the benefit of all
the creditors of the insolvent, such elements of property and property right as could be
reached and subjected by process of law by any single creditor suing alone. "leviable
assets" and "assets in insolvency" are practically coextensive terms. Hence, in
determining what elements of value constitute assets in insolvency, the court is at liberty
to consider what elements of value are subject to be taken upon execution, and vice
versa.
Section 48 of the Insolvency Law, didnt declare items from the ownership of which the
assignee is excluded. Moreover, all life insurance policies are declared by law to be
assignable, regardless of whether the assignee has an insurable interest in the life of
the insured or not.
The assignee in insolvency acquired no beneficial interest in the policy of insurance in
question; that its proceeds are not liable for any of the debts provable against the
insolvent in the pending proceedings, and that said proceeds should therefore be
delivered to his administratrix.
In re McKinney: no beneficial interest in this policy had ever passed to the assignee
over and beyond what constituted the surrender value, and that the legal title to the
policy was vested in the assignee merely in order to make the surrender value available
to him. The conclusion therefore was that the assignee should surrender the policy
upon the payment to him of said value, as he was in fact directed to do.
A surrender value of a policy "arises from the fact that the fixed annual premiums is
much in excess of the annual risk during the earlier years of the policy, an excess made
necessary in order to balance the deficiency of the same premium to meet the annual
risk during the latter years of the policy. This is the practical, though not the legal,
relation of the company to this fund. "Upon the surrender of the policy before the death
of the assured, the company, to be relieved from all responsibility for the increased risk,
which is represented by this accumulating reserve, could well afford to surrender a
considerable part of it to the assured, or his representative. A return of a part in some
form or other is now Usually made."
The stipulation providing for a cash surrender value is a comparatively recent innovation
in life insurance. Furthermore, the practice is common among insurance companies
even now to concede nothing in the character of cash surrender value, until three full
premiums have been paid, as in this case.
The courts are therefore practically unanimous in refusing to permit the assignee in
insolvency to wrest from the insolvent a policy of insurance which contains in it no
present realizable assets.